Some traders think that trading automation means that they have to create a trading robot that handles of all of their trading. It identifies the setup, enters the trade and manages the exits.

This is pretty damn appealing at first and you are probably thinking that this is something that you want to try. I don’t blame you, it appealed to me at one point. It still does, to a certain extent.

Making money while you sleep is the ultimate business.

But creating a trading robot is like getting married in Vegas while you are drunk. It always sounds like a good idea in the beginning, but it rarely ends in a happily ever after.

At least for the average trader.

When you get down to creating a fully automated robot, it is actually pretty scary. If you don’t know programming, you will either have to learn, or put your faith in a developer.  Most people opt for a developer, I sure do.

Before you find a developer however, you will need to quantify your trading system so that a computer can understand it. Something that may be obvious to the human eye, may actually be really hard to define to a programmer.

Take pin candles for example. What is the ideal ratio of wick-to-body? How long should the total length of the candle be? Should it be a up or down candle? That’s not even getting to the entries and exits yet.

Even if you find the best developer in the world, there can still be bugs that can blow out your entire account. Maybe your trades don’t exit like they should if you have more than two trades open. Didn’t test for that?

Well, your trades might stay open longer than you expected. You might login to your trading account one day to find that it has gone to zero.

Not The Only Way

While this is one type of trading automation, it is not the only way. Don’t get me wrong, fully automated trading can work if you know what you are doing.

Like any other trading method however, it has to fit your personality and skill set. I honestly believe that only a small percentage of traders are cut out to be fully automated.

But what about the rest of us? Is there any way that almost any trader can get the benefits of fully automated trading without having to battle the fully automated beast?

I believe that the answer is yes. I call it Incremental Automation. This post will explore the concept of Incremental Automation in Forex trading. I will show you how to start simple and take your trading from partially automated to full automation. The great thing is that even partially automated trading can provide tremendous benefits.

When This Works

This will only work when the method you are trading has defined entry, management or exit signals. They don’t all have to be clearly defined, but the ones that will be automated need to be. Even if you are trading a very discretionary system however, Incremental Automation may still work for you.

Incremental Automation Defined

So what is Incremental Automation and how does it work?

It is simply the process of automating parts of a trading system and adding as many automated components as possible, until you reach the Maximum Automation Point (MAP).

The MAP could just be automating your entry signal with an indicator. You could also have a robot only handle your exits. The degree to which you automate is up to you and will depend on your trading method.

The Simplest Forms Of Automation

Let’s start with a couple of things that you can do right now. The first thing is to create price level alerts.

You can begin by setting an alert when the price of a currency pair hits a historical high or low. These areas can be major turning points in a currency pair.

Since most people use Metatrader, I’ll use that as an example.  To setup a price level alert in MT4, click on the Terminal icon, then click on the Alerts tab. Then right-click on the alerts window and click Create from the menu.

Then setup the type of alert that you want and the price at which you want to be alerted. Text message alerts and push notifications are the easiest way to get notified when you are on the go.

Before you start relying on the alert, be sure to test it out. For more information on how this works check out the MQL4 documentation.

Many mobile apps also have this capability. Here is what it looks like on the Oanda iPhone app:

How to Get Started With Incremental Automation In Forex Trading

You might forget that limit and stop entry orders are also forms of trading automation. Set your entry levels beforehand and you don’t have to worry about watching the trades closely. The only thing that you do have to worry about is canceling pending orders if they are no longer valid.

Automation Through Indicators

If you need to get more complex alerts, custom indicators are the next step in the Incremental Automation process. They provide you with more flexibility than simple price alerts, but they do not take the extra step of actually executing trades.

This is as far as most independent traders will need to go. Using custom indicators with built-in alerts can greatly reduce the number of trades that you miss.

In order to create your first custom indicator, be sure look around for a programmer who has a good reputation and can create what you need at an affordable price. Websites likeElance can also be another source of good talent.

You can also look around the MQL4 Source Code Library to see if there are any existing solutions that you can use. Remember to thoroughly test any indicator that you use.

Indicators may not be as dangerous as Expert Advisers because they do not execute trades, but there can still be bugs.  Monitor your indicators closely for a few weeks to uncover any flaws.

Automation Through Expert Advisors (EAs)

If you have been able to automate your trading signals, now it might be time to start automating your entries and exits. Just like with the rest of this process, you can choose the degree to which you automate.

You may want to enter trades manually, but have an EA exit the trades for you. Or you might want the EA to manage moving your stop. Whatever the case may be, EAs do not have to be used to completely automate your trading.

Conclusion

Consider how you can automate pieces of your system and incrementally get to a level of automation that you are comfortable with. Fully automated trading isn’t for everyone.

But you can still benefit from using it in pieces. I hope that this post has helped you look at automation a little differently. When used correctly, it can help you spend less time in front of the screens. It can also help you diversify your trading strategies and watch multiple systems at the same time.

Why Exposing Scams in Forex Trading Is The Worst Thing For Your Trading

I feel very fortunate to have this blog.

In general, the people that I have crossed paths with in the trading world have been nothing short of amazing. People like Walter Peters, Colin Jessup, Adam Jowett, Chris Lori, Rafael Veron, Chris Capre and many, many more have given me inspiration, support and guidance, many times at crucial points in my life.

This blog post is the result of conversations that I had with a couple of these traders.

No matter how legitimate a trader or educator is, there is always the tendency for people to say that they are a scam. I think this goes for any topic that deals with money. Through my contact with these traders, I feel that I have become quite good at spotting the real deal and a fake. I’m not saying that I will be 100% right, but I can usually sniff it out after a few questions.

But should we be overly concerned with exposing scams? When we do this, is there more going on than we realize?

In this post, I invite you to take a deeper look into the idea of what is a scam and is not a scam. I think you will find that the extremes are very clear cut, but still a very, very small piece of the pie. There is actually a whole lot of gray in the middle.

Much more than you may have thought.

To take it one step further, I believe that our readiness to call something a scam is actually detrimental to our development as traders.

Real Scams Exposed

Let’s get this out of the way first. Yes, there are some straight up scams out there. And yes, you must protect yourself against them.

A recent one that comes to mind is the kid who said he made $72 million dollars trading stocks. He was featured in New York magazine and became famous overnight. It turned out that he never made a dime and all his profits were made in a paper trading account.

I guess it wasn’t that bad because he didn’t actually take any money to invest. It wasn’t right, but the worst that probably came out of this was that his friends won’t give him money to go on a beer run anymore.

Then there are convicted ponzi scheme maestros like Bernie Madoff, Lou Pearlman and of course, Charles Ponzi himself. These were gigantic scams that defrauded investors of millions of dollars. This is the scary stuff that you really have to watch out for.

There are also smaller players who do pretty well for themselves, at least for awhile. If you remember the Adrian Shiroma story, he was pretty pissed that I exposed his scam and started doing all kinds of fun stuff with my picture on the internet.

I actually got an email a few months ago from a reader who gave me his alleged real name and said that the authorities are chasing him through the DR somewhere.

More on that in a bit…

My point is that there are some real scams out there, so I’m not saying that they don’t exist.You do have to be careful. However, I believe that calling something is a scam is the worst thing you can do for your trading career.

Not Scams

Then there are people who have really honed their craft and are super reliable from an education and/or trading standpoint. For the purposes of this post, they are boring.

They are fine upstanding members of society and are certainly what real trading and education is all about. But sometimes, even these people can get pulled into the gray area. If not by actual trading or education performance, then by pure public perception.

The Gray Area of Exposing Scams

Now we get into the area where investments and/or people may or not be a scam. Generally post people lean towards thinking that someone is a scam, for whatever reason. Before you jump to conclusions, really think about the nature of trading and education.

A Bad Year

Trading has its ups and downs. That is a given.

A trader can simply have a bad year. It happens to the best of them. It probably happens to you. Sometimes there are also events that are out of a trader’s control.

‘Nuff said.

Too Much Pressure

One of the professional traders I talked to said that it is fairly common for a good trader to start managing money or a signal service and begin trading poorly. They simply don’t handle the increased pressure well.

Could this be classified as a scam? I don’t believe so.

But that doesn’t mean that they aren’t basically good traders or educators. Rafael told me this story in our interview, of a woman that he raised money for because she had an amazing track record. She could double her account every one to three months, like clockwork.

But she was only trading a $10,000 account. When she got more money (much more) to trade, she couldn’t handle the pressure. She almost lost the whole account before getting back to breakeven and returning the money to the investors.

Was she a bad trader? No way.

She just wasn’t mentally prepared for the stress of the bigger dollar amounts. The same could go for a trading educator who isn’t prepared for the mental stresses of a signal service. You could still learn a lot from them as an educator, but their recent track record could suck because of the added stress.

So before you call someone a scam, take a look at what is really going on behind the scenes. It may not be what it appears to be.

You Don’t Have To Be A Good Trader

This can be a tough pill to swallow and I must admit that I used to be against any advice that came from someone who wasn’t trading for a living. But the fact of the matter is that someone doesn’t need to actually be a good trader to help people trade well. They just have to have a good understanding of what trips traders up and how to fix it.

To give you an example from outside of trading, take a look at the NFL. In 2009, Mike Tomlin became the youngest head coach to lead his team to a Super Bowl victory. But he has never played professional football. His experience consisted of playing wide receiver for the College of William and Mary.

Similarly, Bill Belichick is one of the most successful coaches in the history of the NFL. He only played Division III ‘ball at Wesleyan University in Connecticut.

So don’t ignore trading psychologists and coaches. They can probably teach you a thing or three.

A Scam Is Ultimately Your Responsibility

Yes, scams are completely your responsibility. If you got scammed, it was up to you to do your research on the investment or education and take the proper amount of risk.

So the next time you call something a scam, check your ego at the door. In order to call it a scam, you must have conclusive evidence. If you are in the very large gray area, then it is on you to do your due diligence and limit your risk.

If the risk is too high, simply walk away.

Conclusion

The bottom line is that by calling something a scam, we waste our precious time and mental capital on an endeavor that does not positively affect our trading. A good example is the Adrian Shiroma story.

While writing about the scam and ultimately bringing it down did help a lot of people out, it consumed a lot of my time and I was very concerned about the type of stuff that they would write about me on the internet.

Luckily the scammers were hacks when it came to creating anything online, but it was still mentally draining to file another DCMA every time they put my picture up somewhere else. I was better off focusing on improving this site and creating better products.

Similarly, when you waste your time bashing something/someone for being a scam, you waste your time and do not keep your mind open to the possibilities. By quickly shutting out these opportunities, you limit your ability to learn and grow.

So simply decide if an opportunity is worth the risk or not and don’t go all-in. Only put a small portion of your total capital at risk.

Even if you are completely sure about the opportunity, don’t let an unforeseen event like the recent Swiss Franc tumble cripple you.

If you did your best to research an opportunity and it does turn out to be a scam, then you take an acceptable loss and move on. Just like a Forex trade. Hopefully you learned something from the experience.

Calling something or someone a scam too quickly can cause you to miss out on excellent opportunities and introduces a negative, poverty-based mentality into your psychology. Remember, that there can be a lot more going on behind the scenes than you may realize.Stay positive and understand the risks.

How To Use The RSI Indicator In Forex Trading

The Relative Strength Index or RSI was developed by J. Welles Wilder and published in his book New Concepts in Technical Trading Systems, in 1978. It is one of the most well known and widely used indicators. It is included in almost every charting software on the market today.

But you may not know exactly how this indicator works or how it can be used. This post will get into how it is calculated and a few different ways that it can be utilized to execute trades.

The Calculation

RSI is a momentum oscillator, meaning that it measures directional price momentum and moves between a minimum of 0 and a maximum of 100.

It is calculated as follows:

RSI = 100/ 100-(1+RS)

Where RS = average gain / average loss

The recommended setting for this indicator is 14. So all of our examples will be shown over 14 periods.

RS is a little confusing, so let’s clarify it. The most recent period is calculated in the following way.

The most recent average gain is calculated like this:

Average Gain = Sum of Gains over the past 14 periods / 14

A gain is defined as a period where the close is higher than the open.

The most recent average loss is calculated like this:

Average Loss = Sum of Losses over the past 14 periods / 14

A loss is defined as a period where the close is lower than the open.

After the most recent calculation, the following 13 periods are calculated like this:

• Average Gain = [(previous Average Gain) x 13 + current Gain] / 14
• Average Loss = [(previous Average Loss) x 13 + current Loss] / 14

So the most recent price action carries more weight in the calculation. This is similar to how an exponential moving average is calculated.

But that is only the RS calculation. The rest of the equation normalizes the indicator so that it oscillates between 0 and 100. When the indicator is 100, all 14 periods were gainers and when the indicator is 0, all periods were losers.

How To Use The Indicator

The purpose of the indicator is to alert traders to possible overbought or oversold conditions on the chart. This potentially signals turning points in the market.

The default overbought setting is 70 and the default oversold setting is 30. Whenever the RSI hits 30, it represents a possible buying opportunity and when it hits 70, it is a possible sell opportunity.

Just like with any other indicator, it will not be 100% accurate. It only represents an opportunity. You will have to use your judgement as to when to take a trade.

When It Doesn’t Work

In strongly trending markets, RSI can stay overbought and oversold for extended periods of time. If you were to take every single signal in these conditions, it would lead to huge losses.

For example, take this EURCAD chart. If you too every single overbought signal, it would have resulted in at least six losses and probably more.

Therefore, if you are using the RSI, your risk management plan must include a contingency for limiting losses in a strongly trending market. Limiting the number of consecutive losses or a maximum percentage loss are two ways to do it.

You can also use concepts such as divergence and support/resistance to try to find the very best signals. Let’s take a look at how this works.

Divergence

The first way that you can potentially filter out lower quality signals is by combining the concept of divergence with overbought and oversold conditions. This may filter out false signals, but may also cause you to miss out on opportunities. Thus is the nature of trading, there are no free lunches.

In the chart above, price continues to move higher while RSI makes lower highs. This ultimately signals a drop in price. Again, this will not happen all the time, but it can give you a clue as to what is about to happen.

Support And Resistance

Finally, support and resistance within the RSI itself can be used to signal the end of a trend. Let’s look at the strongly trending chart that we saw before, but from a support and resistance point of view.

While price is in a trend, you will notice that RSI continually runs into resistance until breaks out and resistance becomes support. This signals a turn in price and an end of the trend.

You will also notice that there was a false breakout, but the RSI did not stay above the resistance line. Even if you took a trade on the false breakout, you probably would have been able to make the loss back on the next break.

Conclusion

So that is how the RSI indicator works. Some people tend to dismiss it because it is so simple. But often the simplest tools are the best.

It isn’t perfect, but with some practice and testing, it might work for you. I would recommend exploring it and seeing if it fits your personality. Never trade it live without testing and demo trading it.

If you would like to get alerts in Metatrader 4, whenever RSI goes to overbought or oversold, purchase our Simple RSI Alerts indicator. You can get alerts on your screen, audio sound on your computer, email, text message or push notification on your smartphone.

how to profit in the forex market??

We in the forex market to exploit differences edits between exchange rates, which are usually small differences, but when buying and selling large amounts of currencies are getting lucrative as you will learn the following lessons from, and how to buy and sell currencies in large quantities is through the leverage available from the brokerage firms that up to 1: 400 “will be explain later on Mvhmum leverage.”

Stdhish dear reader, when you know that the forex market is the largest and most financial market in the world and has a daily trading volume of more than 2 trillion (2000 billion) dollars.

If the stock market or other financial whether stocks and bonds or commodity has a place concrete material known place, the foreign exchange market has no physical reality or central, but is an electronic network of central banks and institutions and individual traders and operates 24 hours a day. And start trading in Sydney, Australia and Tokyo, Japan followed closely London, UK In the end, New York, United States.

We’ll come now to learn a very important point for those who are involved in this market who on the ability to provide 2 trillion dollars a day.

Who are the participants in the forex market?

1 – global banks: we find that banks around the world are bigger and more important traffickers in the forex market, they are conducting thousands of transactions daily throughout the day, and the exchange between them or with Albrookr or ordinary investors, through their Permanent Representatives in the field. And you’ll find dear reader that the significant impact on the market comes from the movements of senior international banks, with a daily their transactions billions of dollars.

2 – central banks: the central banks in the forex market conduct transactions mandated by their governments, are moving to influence its own currency, according to the interest of fiscal policy pursued by its state to protect the interests of the state economy.

3 – Investment Funds: It is investment firms or insurance companies or pension funds, according to their own interests intervene to make a profit from the forex market

4 – customers Forex Trading: their mission in the forex market is the link Permanent between buyers and sellers. No they are moving as intermediaries between the various banks, or between banks and private investors. In return for this they collect a commission on this work.

5 – People Independents: We are no ordinary people who are conducting daily operations switch between currencies enormous in order to reap the profit and securing additional source of income or basic to them.

Today, thanks to technology and communications revolution that is sweeping the world, after the collapse of the stock markets, the forex market began to find his way amid ordinary dealers who have relatively small amounts of money, to do to hold millions of operations of buying and selling in the forex market in order to reap the profits.

Note for profit: profit is achieved, for example when buying a euro worth $ 1, for example, and after a few euro rose to become, for example $ 1 and 15 cents, here you can have a profit of 15 cents. It is a relatively small profit but with the leverage available in the brokerage firms will find that the profit would be great.